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Comment by vegetablepotpie | Hacker News Reader

Competition in the energy market is key to bringing more renewables online. With Texas style retail choice we’ve seen 10% of their power come from wind, and that’s not for environmental reasons. It’s just pure market dynamics at play. But we’ve also seen blackouts ~$10,000 residential power bills come out of Texas, so that’s what utilities focus on when there’s talk of competition in other markets.

There are other forms of competition that work better. The form used in CA, OH, and MA is community choice aggregation, which lets municipalities buy electricity for their residents. Newton MA procures 80% of its electricity as renewable. Marin County CA is at 100%. CCAs reduce residential electric bills by 2-9% vs monopoly utilities. With CCA you get the price reductions of the free market, combined with the protections of regulation. The only opposition comes from utilities.

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> There are other forms of competition that work better.

There certainly are. The one that works best is the free market.

There is no such thing as a free market.

You're right, perfection is never possible. Free markets, however, have the wonderful property that the closer one gets to them, the better they work!

On the other hand, the closer one gets to socialism, the worse it works :-(

It just means markets have to be managed. Better management makes better markets, but politics only tolerates so much management merit.

Socialism is politics.

The issue is free markets require more than just open competition, they need zero market coercions such as monopolies or misinformation, while also being free from governmental interference.

That’s clearly a direct contradiction. So basically nobody is actually promoting free markets, they all have their own spin to get past these contradictions.

Free markets do not require perfect information. Every transaction made has an element of risk in it - the risk is factored into the price. Buying a used car is a perfect example. They cost more at a dealer than from a private party - because people will pay more for lower risk. Another example is name brands costing more than generic items. Another is less risky investments come with lower returns.

I don't know where the idea that free markets require perfect information comes from.

As for monopolies, the historical ones are ones set up and enforced by the government.

Free markets need management to continue existing at all. When one gets to a monopoly or oligopoly, it's not a market anymore, so isn't counted. Monopoly is the natural end state of an unregulated market.

Name a monopoly in the US not put in place by the government. Historical or contemporary.

Standard Oil, plenty of others like Microsoft are more arguable but standard oil simply out competed and then bought up the competition.

Standard Oil never was a monopoly, and never was convicted of being a monopoly. It was convicted of restraint of trade.

SO never had a market share that exceeded 90%. Throughout the years-long anti-trust trial, SO's market share declined, as competitors had learned how to compete with SO.

During the height of SO, the consumer price of kerosene dropped 70%. There is no evidence SO harmed consumers or charged monopoly prices.

As for Microsoft, they never had more than 90% share, there were always alternatives consumers could buy (Linux and Apple), and their market share has slipped quite a bit since the Justice Dept took no action against them. There's no evidence Microsoft charged monopoly prices - they charged with giving away free copies of their browser! They still give it away for free.

Nobody ever demonstrated any harm to consumers from Microsoft.

Monopoly isn’t defined as having a market share over 90%, or any specific percentage.

Standard oil was the massively dominant player which controlled enough of the oil supply to be able to set the market price because the competition had insufficient capacity to make up the difference and there was a lack of an equivalent substitute good(s). That’s the economic definition of a monopoly.

As to being convinced, it isn’t illegal to become a monopoly.

Again, SO was never convicted of having a monopoly. SO's market share declined before the anti-trust trial got underway, and steadily declined throughout the trial.

> set the market price

Again, the "market price" declined by 70% under SO's alleged monopoly.

The case wasn’t about having monopoly power, the laws states:

“Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.”

Don’t constrain trade and it’s perfectly legal to become a monopoly. Not being a monopoly is a defense but so is not constraining commerce.

Having a monopoly is not a crime, so nothing you can be convicted of. It was broken up because it was a monopoly.

It’s not perfect information, it’s a lack of misinformation. Indistinguishable fake products remove the possibility of name brands.

You run into situations where people can’t trust a gas station is actually selling gas when anyone can slap an Exxon sign up. Reputation networks fill some of these roles, but gatekeepers aren’t free markets.

A free market comes with it government protections against use of fraud and force. Fraudulently misrepresenting your product is a crime and is actionable in a free market.

That’s exactly the kind of contradiction I am talking about. Some people view such government intervention as part of free markets, others feel free markets only exist without any government involvement.

There is a certain kind of religious nut that exists in the US, and no other place as far as I can tell, that believes that the invisible hand of the market is the benevolent hand of God, and that leaving it to its own devices is best. This is dogma, which needs no proof, and any market failures we mortals point out are simply failures to understand the Divine Plan.

That's a pretty bold claim not backed up by any evidence and I can think of numerous counter examples. So if you make such a claim I you really make a bit of an effort to support it.

Name a couple counter examples.

No evidence? It's all around you. The US for mostly free market. It's done spectacularly well. For communism, how about the USSR, N. Korea, etc. They're not hard to find. Do you think they did well? I read somewhere that N. Koreans were 4 inches shorter than their southern neighbors. Does that sound like hard over socialism is a success?

Why is it that every country and society that tried collective farms starved, and sometimes resorted to cannibalism?

The Pilgrims tried collective farming for their first year. They starved. Jamestown tried collective farms. They starved. The Israeli Kibbutzen are propped up by the government, as they cannot produce enough food. Kansas was called the "Breadbasket of the Soviet Union." And on and on.

I saw on the news the other day an interview with a fellow trying to get in the US via the southern border. He has nothing. He spent 4 months getting from Cuba to that border. What would motivate someone to do that? Triumphant socialism in Cuba?

Your statement was: "Free markets, however, have the wonderful property that the closer one gets to them, the better they work!" and you bring up the US compared to North Korea. That doesn't support your point. You simply showed that a market that is freer than NK works better, that doesn't mean that a market that is freer than the US would also work better than the US, or that the US is the global maximum.

Europe is arguably a less free market than the US but it's by no means clear which one is working better. Somalia ruled by the warlords was a freer market but nobody was emigrating from the US to Somalia.

> Somalia ruled by the warlords was a freer market

That kinda sank your argument, as Somalia is anarchy, not a free market.

> it's by no means clear which one is working better

The US economy does much better than the European one. Look at investment returns, for example. Look at which country all the FAANG companies are in.

> > Somalia ruled by the warlords was a freer market

> That kinda sank your argument, as Somalia is anarchy, not a free market.

A free market is an economical system, anarchy is a political one. They are orthogonal to each other. In fact there are anarcho capitalists (the most extreme liberterians) and anarchistic socialists.

> > it's by no means clear which one is working better

> The US economy does much better than the European one. Look at investment returns, for example.

Investment returns? There are many developing nations that have higher than both. They are significantly based on risk of the investment.

> Look at which country all the FAANG companies are in.

So? They are also in the most regulated (least free market) state in the US, that really doesn't prove anything.

Somalia is the freest market possible, excepting only what the warlords confiscate.

I suggest looking up what a free market is, as evidently you don't believe me.

How about what happened to China when they switched from a centrally planned socialist economy to a free market based economy? Or look at the divergence of the fortunes of North & South Korea after the Korean War?

The evidence is everywhere, and very strong.

That strongly depends on your definition of "better".

How about average height? Check out the US figures for the 19th century. Height turns out to be a very good proxy of prosperity.

The Netherlands have better height. It is not genetic: they didn't, historically. In the US it is decreasing.

And, shall we compare infant mortality figures? How about life expectancy? Europe does better than the US on all but mean income, which is skewed by billionaires. Having more billionaires does not favor your argument.

Infant mortality measurement varies because different countries have different measures of what constitutes a baby. The US tries very hard to save preemies, and those failures are considered infant mortality. Other countries don't, calling them miscarriages. It's a moot point anyway, as infant mortality has declined to statistical noise level in all the first world countries.

Life expectancy: America has a big problem with obesity, which is a side effect of prosperity. Obesity negatively influences life expectancy.

Income: income needs to be expressed in terms of Purchasing Power Parity. Besides, what evidence do you have that this is skewed by billionaires?

I'll stick with average height. It's a pretty good indicator of a prosperous country, up until the genetic potential is reached.

As for the Dutch, having traveled in Holland, they appear to have a culture of more healthy food. It's their choice, and this choice is available to Americans, too. Nobody makes Americans drink soda pop all day.

Move goalposts, much? Declining average height indicates something real.

And, American obesity, and (more to the point) prevalence of metabolic disorder causing it, is not a product of prosperity. It is, ultimately, a product of dysfunctional government, with a consequence of falling prosperity.

As far as I know obesity declines with wealth. I'm not sure you should classify it as a side effect of prosperity. Most countries are able to provide more than enough calories for their populace, that's a fairly out-of-date measure of prosperity.

This is a "content free dismissal" that gets re-litigated on HN every week. If you don't have something new or interesting to say about it, just don't.

Not always. Markets are a poor choice when the barriers to entry are high or when the product is mandatory for life so people can't reasonably elect to not buy it or cut back significantly on their use. This is why we don't put municipal water on the free market, and why Texas can't keep the lights on. This is why no sane country would try to distribute healthcare on a free market.

> when the product is mandatory for life

Would you say food is in that category? The free market is the only system that has ever provided a consistent food surplus. The US, with its free market, became the first country with food security and you can see it in the statistics - the average height of Americans increased throughout the 19th century, peaking out around WW2.

> why we don't put municipal water on the free market

Instead we have water intensive almonds being grown in an arid area undergoing a record drought, alongside the government blocking desalination plants (California)

> why Texas can't keep the lights on

Texas is undergoing a record heat wave. Rolling blackouts are predicted this summer for California.

> no sane country would try to distribute healthcare on a free market

Health care in the US was cheap before the government got involved in it.

> Health care in the US was cheap before the government got involved in it.

Only for those who were healthy and had employer provided insurance. Everyone else either went without or paid through the nose or was dropped as soon as they actually needed services. Healthcare premiums are more expensive now because the insurance is a much better product for many people.

You don't know the history of health care in the United States. Before the government got involved by instituting wage limits during WWII, there was no such thing as "employer provided insurance".

You couldn't have picked a worse example. Food market in the US is incredibly distorted by corn subsidies. There are also strategic stockpiles and regulations around commodity prices to stop periodic free market booms and busts from causing famines. Free market speculators have once fucked up so hard that there's Onion Futures Act.

Modern food surplus is mainly thanks to the Green Revolution, thanks to advancements in fertilizers, pesticides, and machinery. A lot of that was government-lead.

On top of the heavily-controlled agriculture there is mostly a free market for consumer products (just needs to be regulated not to save costs by causing cancers), but that has innovated into making junk food cheaper than a healthy diet.

There are indeed government distortions in the market, you mentioned corn subsidies. There are also government payments to farmers to not grow food.

These are not failures of the free market. The growth of junk food can be attributed in large part to corn subsidies.

Now, if you attribute the success of agriculture to the government, why have all the collective farming systems failed completely? Why did the USSR have to import wheat from Kansas?

Modern wheat came from Norman Borlaug's research, which was funded by the Rockefeller Foundation - not a government project. He received a well-earned Nobel Peace Prize for it.

The Haber-Bosch process was developed at BASF, a private company, and was the first industrialized production of fertilizer.

> heavily-controlled agriculture

That's simply not true. A subsidy is not "control". The government does not direct what gets produced, who produces it, how it is produced, nor does it take the profits.

Health care in the US was cheap only if you never got sick. It was a false promise.

Look deeper into that. For example, health care price increases paralleled inflation until 1968, when they started on a steep upward trajectory, which has never eased. 1968 was when Medicare/Medicaid appeared.

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